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South Korea's Economic Outlook: Why 40% of Manufacturers Fear Downturn

A recent survey paints a cautious picture for South Korea's manufacturing sector this year. Nearly half of the companies polled point to a strong U.S. dollar and wild swings in the foreign exchange market as their biggest worries. Interestingly, the outlook isn't gloomy everywhere, with semiconductor and pharmaceutical firms showing more confidence than others. Overall, most businesses are playing it safe, choosing to maintain their current operations rather than expand.

Key Points: 40% of South Korean Manufacturers Expect Economic Deterioration

  • 40.1% of manufacturers foresee economic conditions worsening in 2025, with FX market volatility a top concern
  • Only 23.6% of firms expect an improvement, while 36.4% predict conditions will remain unchanged
  • Nearly half of respondents cite a strong US dollar and FX volatility as major economic drags
  • Sector outlooks vary, with semiconductor firms most optimistic about expansion plans this year
2 min read

40 pc of manufacturers in S. Korea expect economic conditions to deteriorate

A new KCCI poll reveals 40% of South Korean manufacturers expect a 2025 economic downturn, citing FX volatility and Trump-era trade uncertainties.

"Despite expectations that exports and domestic consumption will recover... businesses are set to maintain a prudent management stance due to uneven recovery across industries and a strong U.S. dollar. - Kang Seok-koo, KCCI"

Seoul, Jan 13

Around 40 per cent of South Korean manufacturers expect economic conditions to deteriorate this year amid increased volatility in the foreign exchange (FX) market, a poll showed on Tuesday.

According to the poll conducted recently by the Korea Chamber of Commerce and Industry (KCCI) on 2,208 manufacturing firms, a total of 40.1 percent of respondents said they expect a deterioration in economic conditions, reports Yonhap news agency.

In detail, 14.7 per cent of respondents pointed to a clear deterioration, while 25.4 per cent expected a slight downturn.

Of the respondents, only 23.6 per cent said they expect an improvement, while 36.4 per cent said conditions would remain unchanged from 2025.

The KCCI said 47 per cent of respondents cited the strengthened U.S. dollar and growing volatility in the FX market as major drags on the South Korean economy.

Other major concerns included volatility in crude oil and raw material prices, as well as trade uncertainties stemming from policies of U.S. President Donald Trump's administration.

Citing such risks, only 20 percent of respondents said they plan to expand their operations this year, while 67 percent said they would maintain the status quo.

Per sector, 47 per cent of companies in the semiconductor industry, currently enjoying an industrywide supercycle boom, said they plan to expand their businesses this year.

Pharmaceutical and cosmetics firms also painted an overall optimistic outlook, with 39.6 per cent and 39.4 per cent of firms in the sectors, respectively, saying they plan to expand their businesses this year.

"Despite expectations that exports and domestic consumption will recover simultaneously this year, businesses are set to maintain a prudent management stance due to uneven recovery across industries and a strong U.S. dollar," Kang Seok-koo, head of the research division at the KCCI, said in a release.

- IANS

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Reader Comments

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Priya S
Interesting to see the contrast within sectors! Semiconductors and pharma are bullish while others are cautious. It shows how a "K-shaped" recovery is a worldwide phenomenon now. We see the same in India with IT services doing well but some manufacturing struggling.
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Aman W
The mention of Trump administration policies causing trade uncertainty is key. Global supply chains need stability, not sudden tariffs or bans. This volatility makes long-term planning impossible for businesses, whether in Korea or here.
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Sarah B
As someone who follows economics, this is a sobering read. When 67% just want to maintain the status quo, it signals low confidence in growth. It affects job creation and investments. Hope policymakers are paying attention.
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Karthik V
South Korea is a major trade partner for us. If their manufacturing sector slows down, it could impact components and electronics imports to India. Our 'Make in India' needs to factor in these global headwinds. Jai Hind! 🇮🇳
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Nikhil C
While the article is informative, I wish it had more comparative data. How does this 40% figure compare to last year or to other nations? Without context, it's hard to gauge how serious this pessimism really is.

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